TMB Money Fund gains as investors flee stock market

As of Friday, the fund's size stood at Bt16.89 billion, up Bt1.58 billion from Bt15.3 billion on Thursday. The fund's units were priced at Bt11.55 on Friday.

"Amid volatility in the stock exchange, investors have shifted their investment to money-market funds, waiting for the right time to return to the stock market once the US sub-prime crisis and domestic political uncertainties ebb," said TMB Asset Management managing director Jotika Savanananda.

She said it is a good decision as the money-market fund offers returns higher than deposits and it is easy for them to move money elsewhere. Returns from the funds are also exempted from tax. While the three-month return reference rate is 1.56 per cent, TMB Treasury Money Fund's three-month return is 3.05 per cent.

The fund's return in the past month also increased due to expectation that interest rates would rise, as the Monetary Policy Committee is likely to up rates during the rest of the year. The one-day repurchase rate is now 3.75 per cent. The committee convenes on October 8 and December 3.

The fund invests primarily in treasury bills, government bonds and state agencies' bonds, Bank of Thailand bonds, and Finance Ministry-backed bonds. It also has the policy to invest in overseas-offered bonds, which are fully hedged against exchange volatility.